It was a pivotal week even before Thursday and Friday. On Tuesday night we sent this to our subs about the IWM:
“Most important chart for us right now: Bullish is when/if trend-line breaks; bearish is if weekly 50sma which has been holding for 4 weeks fails. Whatever direction it goes we think will direct the whole market.”
And two days later:
This was the first test of the weekly 50sma on the $QQQ and usually first tests hold, at least for a bounce. Not this time.
So what’s next? Next magnet is the 100 zone on the $QQQ which is horizontal support from Dec-Jan, the monthly 20sma, and the test of upper trend-line channel. Big area.
What’s pretty amazing is how cool and collected this sell-off is — what do you see here? A simple two day trend down under the 15 min/9EMA. Makes us feel somewhat stupid for trying to go against it on Friday.
Hindsight is 20/20 and we wish we had paid more attention to this 3 weeks ago –a very clear $AAPL break-down.
However you want to analyze it the technical damage is massive on the short-term (daily) and intermediate (weekly) time frames.
Longer-term charts still intact — but that’s not really as much for traders rather than for investors. We’d have to break 90 on the $QQQ for that to break.
And last but not least — take a look at this chart for a taste of $SPX perspective (and the 20sma/monthly -click to enlargen)
Support is meaningless when bear sentiment rules– we don’t think we’re there right now. Yet anyway. Let’s see what happens on $QQQ 100 and then re-assess. See you Monday in the virtual trading turret @Stocktwits.
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